S&P 500, Dollar And Government Bond Yields Outlook After The Fed

In line with market expectations, the FOMC decided to raise rates by 25 basis points at the end of Wednesday, December 14, monetary policy meeting. However, contrary to our view, the Fed raised its estimate for the number of rate hikes in 2017 from 2 to 3, albeit maintaining both GDP and inflation projections for the next 2 years almost unchanged. Fed members estimated GDP will grow by 2.1% in 2017 and 2% in 2018 and inflation by 1.9% and 2%, respectively.

Despite being caused only by higher projections of some Fed’s members, the impact of the upward revision of Fed Fund rate projections